Question 1

Discuss how a multistate business divides up its corporate taxable income among the states in which it operates.Hint: use the terms allocation and apportionment in your comments.

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Question 2

A number of court cases in the last several decades have involved the application of a state's nexus rules concerning a business taxpayer.What is the significance of the term nexus when discussing state income taxation?

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Question 3

Discuss the primary purposes of income tax treaties.

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Question 4

In international corporate income taxation,what are the uses of the "sourcing rules" in computing Federal taxable income?

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Question 5

Flip Corporation operates in two states,as indicated below.All goods are manufactured in State
A.Determine the sales to be assigned to both states to be used in computing Flip's sales factor for the year.Both states follow the UDITPA and the MTC regulations in this regard.
 $\begin{array}{lll}
&\textbf{State A}&\textbf{State B}\
\text { Gross sales to purchasers in state } & \$ 400,000 & \$ 350,000 \
\text { Sales returns } & 9,000 & 11,000 \
\text { Discounts allowed } & 21,000 & 31,000 \
\text { Caryying charges collected back from customers, separately stated } & 20,000 & 10,000 \
\text { Rental income } & 60,000^* & 25,000^{**}
\end{array}$ * Excess warehouse space,seasonal rental to a competitor.
** Land held for speculation.

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Question 6

With respect to income generated by non-U.S.persons,does the U.S.apply a "worldwide" or a "territorial" approach.Be specific.

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Question 7

Your supervisor has shifted your responsibilities from the Federal corporate income tax to a multistate corporate income tax practice.In what areas might your Federal income tax knowledge also be applicable in your new assignment?

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Question 8

State Q wants to increase its income tax collections,but politically it would be unwise to raise taxes on in-state individuals or businesses.Q currently follows all UDITPA rules and employs an equally weighted three-factor apportionment formula.Q allocates nonbusiness income amounts.

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Question 9

Compost Corporation has finished its computation of Federal taxable income.In State Q,the derivation of state corporate taxable income starts with the Federal amount and makes a number of modifications.List at least five such modifications that Compost is likely to encounter.In this regard,follow the general UDITPA rules,and list both addition and subtraction modifications.

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Quiz 13: Multijurisdictional Taxation